India’s gold demand in 2024 is projected to reach its lowest level in four years. This decline is attributed to a significant rise in gold prices, which is expected to impact purchases during the crucial festival season in the December quarter, according to the World Gold Council (WGC).
The WGC estimates that India’s gold demand could range from 700 to 750 metric tons in 2024. This would be the lowest figure since 2020, down from last year’s demand of 761 tons, according to Sachin Jain, CEO of WGC’s Indian operations.
Typically, gold purchases in India peak towards the end of the year due to weddings and major festivals like Diwali and Dussehra, which are considered auspicious times for buying gold. However, this year many consumers made purchases earlier in August. This shift followed a significant drop in local prices after the Indian government reduced the import duty by 9 percentage points in July.
“Buyers are now waiting for prices to stabilize,” Jain noted. “As a result, demand in volume terms will likely be lower this year during the festival season.”
On Wednesday, domestic gold prices reached a record high of Rs 79,700 ($947) per 10 grams. Prices have risen by 26 percent in 2024, following a more than 10 percent increase in 2023.
Despite the anticipated drop in demand, Indian gold consumption rose by 18 percent in the July-September quarter, totaling 248.3 tons. This increase was driven by a 41 percent jump in investment demand and a 10 percent rise in jewelry demand, according to WGC data.
Additionally, India’s gold exchange-traded funds (ETFs), which are backed by physical gold, saw inflows for the sixth consecutive month in September. Their total holdings increased to 52.6 tons, up from 43.3 tons in January.
Jain commented on the market dynamics, stating, “With a lot of liquidation happening in the stock market, we expect some inflow from that sector this quarter.” Notably, India’s NSE Nifty 50 share index has declined by about 7 percent since hitting a record high on September 27.
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